Any large generator (typically 500 kilowatts+) which connects to SaskPower's electricity network, has to pay a connection and balancing charge to SaskPower. The charge paid by wind energy is more than double that paid by coal. Solar pays more than four times as much.

In this post we take a look and explain the calculations as well as why they do not encourage renewables.

First the connection and balancing charge itself. Here it is by generator type;

In isolation these numbers do not mean a whole lot: but consider that SaskPower's average 2014 wholesale electricity price was around $65 per megawatt hour.

So why does it vary so much?

Every month SaskPower charges any generator $3,833 per megawatt of installed generating capacity (The Open Access Transmission Tariff), for the right to be connected to and to transmit power over, the Saskatchewan power system. Details are contained in a lengthy document on SaskPower's web site. Conceptually, at least, the charges are the same for all generators.

However, and in practice, things are very different (as shown).

As noted, the OATT charge is levied based on the installed capacity. However different generation types (i.e. solar, wind, hydro, gas & coal) produce different amounts of electricity from the same installed generation capacity. The term for this is the 'Capacity Factor'.

The following shows that coal has the highest capacity factor in Saskatchewan (76.2 percent) and solar the lowest (17.5 percent). Roughly speaking this means that a unit of coal generation capacity will generate electricity for 76 percent of the time while a unit of solar capacity will be generating for 17 percent of the time.

The practical implications of this are, as shown in the chart at the top of this blog, that each unit of electricity from a wind turbine will pay more than twice as much to SaskPower, for use of the transmission network, as a coal-fired generator. For a solar power producer it is even more challenging: they will pay more than four times more than coal.

The result is that this legacy transmission charging regime has the perverse effect of making it more difficult to achieve SaskPower's ambitious new policy of 50 percent renewables by 2030.

It is also of note that a tariff structure set up this way may give the US Federal Energy Regulatory Commission cause for concern in that it appears to conflict with their Order 888 - on Open Access Transmission Tariffs. Since FERC is a US body one might be tempted to say "so what". However FERC has shown itself quite willing to pursue perceived Order 888 violations under NAFTA.